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Case Update: Federal Court decides on disputes pertaining to final claims under CIPAA.

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ADJUDICATION
Adjudication decision – Construction contract – Whether CIPAA 2012 is applicable to disputes pertaining to interim claims only or is it also applicable to disputes relating to final claims? – Whether CIPAA 2012 should prevail over Architect’s Act 1973 – Construction Industry Payment and Adjudication Act 2012 (CIPAA), section 15

Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd
Civil Appeal No 02(f)-3-01/2018(W), Federal Court
- see the grounds of judgment here

Facts Martego Sdn Bhd (the appellant), is a private limited company carrying on business in property investment, and Architect Meor & Chew Sdn Bhd (the respondent) is a private limited company providing architectural consultancy services. The appellant engaged the respondent as a project architect for a multi-storey development project. The respondent’s scope of services was for “contract administration” and it included, but was not limited to, recommending the list of contractors and sub-contractors for tender and issuing progress claim certificates to the contractors upon consultation with the appellant. Subsequently, the appellant terminated the respondent’s service under the construction contract and the respondent accepted the termination. Following this, the respondent claimed for the professional fees until the date of termination of the contract. The Adjudicator awarded the respondent the payment of the balance amount of the total entitlement. Dissatisfied with the Adjudicator’s determination, the appellant appealed to the High Court to set aside the same premised on section 15[1] of CIPAA 2012. The respondent, on the other hand, applied to the High Court to enforce the Adjudicator’s determination. The High Court dismissed the appellant’s application and allowed the respondent’s application. The Court of Appeal dismissed the appellant’s appeal and affirmed High Court’s decision. Hence, this appeal.

Issues Whether CIPAA 2012 is applicable to disputes pertaining to interim claims only or is it also applicable to disputes relating to final claims?; and
Whether CIPAA 2012 should prevail over Architect’s Act 1973.

Held In affirming the decision of the High Court and the Court of Appeal, the Federal Court held that so long as there is a sum payable under a construction contract for work done and as long as the party remains unpaid, the claim can still be brought against the other party through CIPAA 2012 as it is payment dispute under the construction contract. Section 4[2] and 5[3] of CIPAA do not suggest that the payment claim should be confined to interim claims only. The Federal Court further held that there is nothing to stop CIPAA from being applied to the case at hand as adjudication under Architect’s Act 1973 and arbitration under CIPAA were not mutually exclusive to each other.  Adjudication would only yield a decision of temporary finality and it is only with arbitration or litigation that one get a final and binding decision.
 
 
[1] Improperly procured adjudication decision
[2] Interpretation
[3] Payment claim